Tech Companies Banking On More Smartphone Shopping

China’s two largest tech companies are hoping that consumers will spend more time on their phones than in malls, investing heavily in a strategy that combines e-commerce and smartphone applications.

Reuters

The future of shopping in China may be on smartphones.

Alibaba Group Holding Ltd. and Tencent Holdings Ltd. are looking to tap location-based services to target shoppers with advertisements based on their whereabouts or to help them comparison shop on their smartphones—even while in a rival retailer’s store.

Given China’s still-creaking mobile networks, analysts aren’t sure when such services will become popular, let alone commercially viable. But a new study by International Business Machines Corp. gives reasons to be optimistic such services could become popular sooner rather than later in China.

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According to the IBM survey of almost 1,600 shoppers in China across age, class and gender groups, Chinese are far more likely than other consumers around the world to check out goods at physical stores and then buy them online afterward.

This group, called showroomers within the industry, makes up 24% of shoppers in China compared with just 7% in the U.S., 5% in the U.K., and 11% in Japan. And the numbers seem likely to rise; the survey found that 42% of shoppers who made purchases in stores were undecided about whether they would buy in a store or online in the future.

But most important for companies that want to influence Chinese consumers’ decisions when they are in stores: 45% of showroomers used a mobile device while shopping to either compare prices, read reviews or learn more about products.

Chinese were also more willing than customers in the rest of the world to share personal data – from lifestyle and demographic information to their financial background or location – with retailers. Additionally, 36% said they were aware of whether a retailer offered an application, compared with just 2% in the rest of the world.

All of this is good news for Alibaba and Tencent, which have been investing heavily in anticipation of demand for mobile shopping.

Alibaba has invested more than $800 million over the past month in Sina Corp.’s Weibo microblog and AutoNavi Holdings Ltd. – an online mapping company. Analysts say a product that combines Weibo’s social-media functions with AutoNavi’s mapping information and Alibaba’s massive e-commerce offerings could be an extremely powerful tool for selling advertising.

Meanwhile Tencent has made no secret about plans to use its popular WeChat messaging application in the future as a means to target shoppers based on their location. Tencent has also been investing in its own e-commerce offerings.

It’s hard to know how developments will shake out in China, with mobile speeds still slow and the larger population yet to switch over to more advanced smartphones. But if the Chinese appetite for shopping is any clue, there’s likely to be quite a bit of money to be made in applications that help shoppers navigate the malls.

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